As cryptocurrencies become an increasingly significant sector of the economy, the question of what drives these values may be comparably unstable, particularly if they are driven by online memes.
The crypto market has seen a recent revival of memecoins, which are volatile cryptocurrencies based on the fluctuating popularity of internet memes. In the first six months of the year, nearly 1.7 million new coins entered circulation, compared with 264,000 over the same period in 2023, according to Dune Analytics, a crypto data tracker.
Many of the tokens have names like Bread or Baby Trump (the former president in a diaper). One of the most popular memecoins is based on Pepe the Frog, an alt-right mascot that is sometimes used as a hate symbol.
After the attempted assassination of Donald Trump, another memecoin called $EAR shot up in value.
Memecoins are online jokes converted into digital money, and are only worth what people are willing to pay for them. The most famous memecoin is Dogecoin, a cryptocurrency linked to a meme of a talking Shiba Inu puppy, which became one of the most popular digital currencies in 2021, until the hype plateaued and the price plummeted. Dogecoin is now worth about 13 cents a coin, down from a record of 73 cents.
The NY Times reported much of the activity has been driven by Pump.fun, a website that started in January and offers a quick and easy method for creating new memecoins. Over the first half of the year, the site generated about $60 million in transaction fees, according to an estimate by Subin An, an analyst at the crypto venture firm Hashed. However, reportedly there is little known about its operations or its founders, who conduct business under aliases.
Members of the crypto industry have sought to put financial scandals and questions of corruption behind the economic sector, with lobbyists advocating for less government regulations as the industry grows more prominent and stands to play a considerable financial role in campaigns during upcoming elections. However, memecoins still represent a risky practice that points to past issues over regulation of unstable markets within cryptocurrencies.
Still, the shortage of information about Pump.fun hasn’t deterred many crypto traders. Josh Bailey, a 26-year-old day trader from Austin, Texas, told The Times that anyone investing in digital currencies should understand the risks. Yet, the concern of how these fluctuating currencies will affect the economy in the long run still remains.
